If you go to the City of North Vancouver’s web page describing property taxes, it features a graph that appears to show a declining trend in property taxes in the City over the years from 2007 to 2014:

While a casual inspection of the graph might make you think that taxes have been decreasing, it is only the rate of increase that is decreasing. As anyone who has been paying those taxes over those years, their 'lived experience' would be much different than what this graph is indicating.

In fact the cumulative effect of all of those successive increases is that residential taxes in the City of North Vancouver have increased by 46% in the 8 year period when average family incomes have increased only 8%. Local government is the fastest growing part of the public sector, and certainly growing faster than the private incomes that it ultimately relies upon to pay the taxes.

While the graph showing a 'declining rate of increase' is annoying, there is another even more misleading comparison featured on the “Tax Information Sheet” is enclosed with every tax notice. A copy is also available on the website. It purports to compare taxation levels between jurisdictions by comparing municipal taxes on a ‘representative house’. If you look at it with an uncritical eye, you would think that taxes are ‘high’ in West Vancouver and North Vancouver District and ‘low’ in Port Coquitlam and North Vancouver City.

If you look at municipal tax rates instead, the picture can be turned on its head. The tax rate is actually highest in Port Coquitlam and lowest in West Vancouver. North Van City is in the middle and certainly higher than the Districts of West and North Vancouver.

2014 Municipal Tax Rates Of MetroVancouver Local Governments

*Rates from an excel spreadsheet provided by the Provincial Government Local Government Statistics website. The tax rate for NorthVan City slightly differs slightly as the City does not follow the provincial reporting guidelines.

So which is the more reasonable comparison? I believe any fair person would agree that the rate has much more to do with fairness than does the actual taxes paid. The rate is the relationship between the amount of tax payable and the amount of income, or in the case of property tax, the asset value, that is subject to the tax.

The only reason that “taxes paid on a representative house” are low in Port Coquitlam, when their rate is the highest in Metro Vancouver, is because home values in that community are low. It seems perverse to be claim some kind of virtue in lower cash taxes when they are lower only because the homes in your community are less valuable.

One would hope that generally richer people pay more tax than poorer people. One would also hope that they at least pay the same rate, or even a higher one if we believe the tax system should be a 'progressive' one, featuring higher rates of tax for higher levels of income or wealth.

Property taxes in Metro Vancouver, however, are most certainly not progressive. They are quite regressive. Homeowners in poorer communities like Port Coquitlam and New Westminster have to pay a much higher percentage of their home value in tax to support their local government than homeowners in West or North Vancouver Districts, or in Vancouver itself.

Property tax is particularly challenging because it is a tax on the value of one’s major asset regardless of income. Does it seem fair to you that in West Vancouver, the wealthiest community in the country, they also pay the lowest rate of tax on their much more valuable homes.

It is disingenuous that the North Vancouver City Government continues to present this specious and self serving comparison in the information that it sends out to all of use every year.

The City's municipal tax rate is now in the middle of the pack. But where is it likely to go from here? There are several reasons to believe that it will start trending higher than the District tax rate, after being virtually the same for many years, for a number of reasons.

One reason is one given in the City’s Tax Information Sheet. It talks about the average value of single detached homes going up by 1.14% year over year, while the value of strata residences going down by almost 2% in the same year.

Strata homes make up 85%of the housing stock of the City. If this trend continues, NorthVan City will have to raise its tax rate faster than the District just to raise the same amount of revenue. Many people believe that there is more downside to strata property values than there are for single family home values.

One way to avoid that squeeze is to increase the number of new units by more than the decrease in their value every year. But that in turn could create the risk of being dependent on continuing to grow to fund normal budget increases while at the same time creating longer term pressure on infrastructure from the rapid population growth.

Another reason is that taxes in the City are likely to go up faster is that it faces much more pressure to increase social service related spending than the District.

The City owns social housing. Virtually all of the major social service agencies are in the City. There is pressure to change the allocation of the policing budget from a population based formula to an activity and call based formula. This would significantly increase the costs to the City as the majority of crime in North Vancouver occurs in the dense urban and poorer core.

Certainly if the City decides to take on the financial risk of developing a new waterfront attraction, which its consultant admitted was planned to serve the whole North Vancouver population, then there is another potential source of cost pressure.

The City needs the District tax base to fund the future development of the core services and amenities for all of North Vancouver for the next 100 years. It should find a way to overcome the myopia and self interest of certain politicians and senior staff and do the right thing for whole North Vancouver community.

Old timer being squeezed

22/8/2014 03:29:08

Owner of a 1970 ish strata in Lower Lonsdale, assessment went from 268K to 298K in 2014 -comments 'due to new construction/development'. There is no development within 6 blocks. 11% increase in assessment, 12% increase in taxes but can't sell unit for price paid 4 years ago.